Layaway back in style: Afraid of debt, shoppers limiting credit card use

Friday

Nov 21, 2008 at 12:01 AMNov 21, 2008 at 9:21 PM

Layaway, that throwback from an era when consumers actually paid for purchases before taking them home, has been dusted off and put back out on the shelves – just in time for the holidays.

Christine Steele

Layaway, that throwback from an era when consumers actually paid for their purchases before taking them home, has been dusted off and put out on the shelves – just in time for the holidays.

Layaway allows shoppers to put merchandise aside and have the store hold it for them, while they pay it off over time – usually 30 days, but sometimes longer.

In the mid-1980s, the demand for layaway programs dropped when more people started using credit cards, said Jon Hurst, president of the Retailers Association of Massachusetts.

“A higher percentage of folks obtained Mastercards and Visas and instead of putting some money down to have a product held, people wanted that instant gratification and to take it with them now,” Hurst said.

During that time, some stores also rolled out their own credit cards, and fewer consumers used layaway.

“That certainly worked for the retailers because they didn’t have to deal with the administration, and that became an incentive for stores to drop it,” Hurst said.

But now, a retailer that did do away with layaway is bringing it back and others are promoting it for the first time in decades.

Earlier this fall, Kmart, which had continued to offer layaway to its customers throughout the years, began running TV ads promoting the service for the holiday season. Sears – an affiliate of Kmart that had discontinued layaway in the mid-1980s long before the two chains became part of the same company – announced it was bringing layaway back for a limited time.

“In these times, the desire to not use credit has created an increased demand for it,” Hurst said.

Sears rolled out its program on Nov. 16. Customers have until Dec. 23 to pay for and pick up their merchandise. Some items are not eligible for layaway at Sears, such as electronics, home appliances, computers and automotive merchandise.

Stewart Bunker, store manager at the Sears at the South Shore Plaza in Braintree, Mass., said most customers are using the program to lay away toys and clothes.

“It started off kind of slow last week, but each day we have doubled since the day before,” Bunker said. “We expect it to peak next Friday.”

The average Sears layaway ticket is about $200.

In addition to the television spots, the company has notified customers through e-mails and in-store signs.

Dorothea Zinnanti, a spokeswoman for Sears Holdings Corp., which owns Sears and Kmart, said layaway usage has doubled at Kmart stores this year.

TJ Maxx and Marshalls, which are owned by Framingham, Mass.-based TJX Cos., are two retailers who also never discontinued the program.

TJX spokeswoman Annmarie Farretta said the company offers layaway in many – but not all – of its stores.

Stores often charge a small fee, typically $5, in addition to requiring some down payment, usually 10 to 20 percent of the total cost of the purchases. Some stores charge a cancellation fee.

Kohl’s doesn’t have layaway. Wal-Mart dropped it in 2006 and has no plans to bring it back. KB Toys doesn’t have it. Neither does Best Buy.

Burlington Coat Factory does offer lawaway, and district manager Ed Mulvey said any item at the chain’s stores is eligible for layaway. The company requires 20 percent down, charges a $5 processing fee, and items have to be paid off in 30 days, except furniture, which must be paid off in 90 days.

Mulvey said the Braintree store has one of the highest layaway usage in his district, which includes Massachusetts, New Hampshire and Maine.

“At this time of year we will have upwards of a couple thousand layaways there at any given time,” he said.

The Patriot Ledger

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